Chicago Tribune, May 17, 2012
Top Republican boosts pressure for U.S. tax rewrite
by Kim Dixon
... Representative Dave Camp,
chairman of the House Ways and Means committee, said after weeks of meetings
he saw strong Republican support for using year-end expiration of individual
rates "as leverage to force action in 2013 on comprehensive tax reform." ...
The so-called fast-track procedures force up-or-down votes with no
amendments and set deadlines.
...
Obama and most Democrats favor letting lower rates for the wealthiest
Americans expire, and raising tax rates on investment income for high-income
earners.
...
The extenders are a hodge-podge of tax breaks that are typically extended
each year with little debate. Camp's panel will hold a second hearing on the
breaks' merits, likely in June.
Separately, a top adviser to Camp told another tax panel that the Republican
plan to slash the top corporate rate from 35 percent to 25 percent will
require painful choices.
2-4-8 Response
"Camp told another tax panel that the Republican plan
to slash the top corporate rate from 35 percent to 25 percent will require
painful choices [among the tax expenditures]."
A small 4% value added tax (VAT) could reduce the
corporate tax rate to 8%.
A smaller 2% net wealth tax (excluding $15,000 cash and
retirement funds) could reduce the individual income tax rate to 8%.
The 2-4-8 Tax Blend has the lowest rates and will
produce about $500 billion more than current federal revenue with no need
for payroll, estate, and capital gains taxes or deferral of foreign income.
Goodbye tax expenditures!
In 2010 the Simpson Bowles Commission studied income
tax expenditures and some spending programs but were not permitted to
explore a value added tax (VAT) or net wealth tax due to the constraints of
the Executive Order that set up the commission.
The US is the only developed country without a VAT and
that is why our top corporate tax rate of 35% is so high. The only rational
reason for eschewing a net wealth tax is the sacred cow of avoiding “double
taxationâ€. This common knee jerk reaction fails to appreciate the potential
benefits of very low rates and delayed taxes (i.e. much better to tax 8% of
income now and 2% of retention for each of the next 10 years, than to tax
28% now).
Eugene Patrick Devany, JD, MPA
www.TaxNetWealth.com
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